S&P Retains Shanghai Construction Group's BBB Rating on More Policy-Related Activities
S&P Global Ratings has maintained Shanghai Construction Group's (SHA:600170) BBB long-term issuer credit rating, according to a Monday release.The rating agency sees more policy-linked engineering and construction (E&C) and public services activities for the company.S&P now sees the company as having a high likelihood of extraordinary support from the Shanghai municipal government in case of need.The company will have greater importance in modernizing the city's underground infrastructure in the next five years, S&P said.However, China's E&C industry will face further weakness given dampened demand and longer cash collection periods, with the company's sluggish profits and working capital conditions leading to a debt-to-EBITDA ratio above 4x over the next two years, S&P said.The outlook is stable, stemming from the company's perceived importance in executing government-tied services in Shanghai, the rating agency said.Material shifts in the company's debt-to-EBITDA ratio or the likelihood of extraordinary government support could lead to future rating actions, S&P said.
